New Delhi: After the victory of Donald Trump in the US Presidential elections, everyone is talking about one apprehension. That is, Trump will erect tariff walls for China. The question is, does Trump really have the power to single-handedly shake the world’s second largest economy? In a new survey, economists estimate that if Donald Trump, after assuming the presidency, fulfills his promise of imposing heavy import duties on goods coming from China, then China’s economy may face a major blow. According to the survey, after the start of Trump’s tenure, up to 40 percent tariff may be imposed on goods coming from China at the beginning of next year. Due to this, China’s economic growth rate may fall by 1 percent. This decline is quite big. Reuters conducted this survey on November 5 after the election victory of Donald Trump. This is the first such survey conducted on China’s economy. This survey also estimates that Trump will avoid imposing up to 60 percent import duty on Chinese goods at the beginning of his tenure.
Had promised to impose heavy tariff
During the election campaign, Trump had promised to impose heavy tariffs on goods imported from China under the ‘America First’ trade policy. There is uneasiness in China due to this statement of Trump. Due to this, China’s growth is at risk.
The tariffs proposed by Trump are much higher than the 7.5%-25% imposed on China during his first term. On the other hand, prolonged market decline, credit risks and weak domestic demand have weakened China’s economy. He is not in the same condition as before.
A Reuters survey of more than 50 economists conducted between November 13-20 showed that a majority of economists both inside and outside China believe Trump will implement new tariffs by early next year.
This fear is haunting America too
However, most economists do not expect that up to 60 percent import duty will be imposed on Chinese goods as early as 2025. The reason is that this can increase the inflation rate rapidly in America. ANZ chief economist Raymond Yang says, ‘We hope that the new US administration will implement the original plan of Trump 1.0.’ He estimates that the average import duty on Chinese goods may be increased by 32-37 percent.
Analysts say that China has been increasing stimulus measures to boost growth since the end of September. Now to compensate for the expected decline in exports next year, pressure will increase on it to boost domestic demand. Exports have been a major factor in China’s economic growth this year. Regarding the possible impact on China, the survey has estimated that the imposition of new import duties by the US will reduce China’s economic growth rate by about 0.5-1.0 percent in 2025.
India will play an important role
India’s role will be important in all this. India is one of the largest markets in the world. There will be increased pressure on China to improve its trade relations with India. He has also taken steps in this direction. It has recently taken important steps to resolve the long-running border dispute with India. China has also started improving relations with European countries.
How would high tariffs on Chinese goods affect the global economy?
Title: The Economic Impact of Trump’s Tariff Promises on China: An Interview with Dr. Emily Lee, Trade Policy Expert
Editor (Time.news): Good afternoon, Dr. Lee, and thank you for joining us today to discuss this pressing issue regarding Donald Trump’s potential trade policies and their implications for China’s economy.
Dr. Emily Lee: Thank you for having me. It’s a pleasure to be here.
Editor: With Trump’s recent election victory, there’s been a lot of talk about the possibility of heavy tariffs on Chinese goods. A recent survey indicated that economists predict tariffs could reach up to 40%. What do you think this would mean for China’s economy?
Dr. Lee: If Trump follows through on his promise to impose such high tariffs, it could indeed have a significant impact on China’s economy. A forecasted 1% decrease in economic growth might not sound very large in absolute terms, but for a country like China, which has relied heavily on strong growth rates, this is a major concern. It could also exacerbate existing economic issues, particularly considering the weakened state of China’s domestic demand and credit risks.
Editor: That’s quite an alarming prediction. How do you think the Chinese government is reacting to these potential changes?
Dr. Lee: There is understandably a degree of unease within China’s leadership. They recognize that Trump’s ‘America First’ policy not only poses a threat to their export-driven economy but also challenges the overall economic recovery they have been aiming for, especially after the disruptions caused by the pandemic. They might consider various responses, from negotiating peaceable trade relations to reinforcing their domestic market to mitigate the impact.
Editor: How do these proposed tariffs compare to those imposed during Trump’s first term?
Dr. Lee: The tariffs proposed now, at levels between 40% and potentially even upwards, are substantially higher than the 7.5%-25% tariffs we saw during his first term. This reflects a more aggressive stance, possibly signifying a shift in the U.S. approach toward trading relationships—especially with major economies like China.
Editor: You mentioned that China’s economy is not in the same condition as it once was. Can you elaborate on that?
Dr. Lee: Certainly. China has been grappling with a variety of challenges including prolonged market declines, vulnerable credit situations, and an overall lack of domestic demand. These factors have weakened their economic foundation. The high tariffs could exacerbate these problems, as industries that rely on exports may face decreased orders, leading to layoffs and further diminishing consumer confidence domestically.
Editor: What strategies do you think the Chinese government might deploy to counteract the effects of these tariffs?
Dr. Lee: China may pursue several strategies: enhancing their domestic consumption through stimulus packages, seeking new trade partnerships in different regions, or even investing in technology and innovation to become less reliant on exports. Moreover, they may also engage in diplomatic negotiations to ease the tensions with the U.S. and appeal for reconsideration of the tariffs.
Editor: in your opinion, does Trump possess the unilateral power to enact such sweeping changes, or are there checks and balances in place?
Dr. Lee: While the President has significant influence over trade policy, there are indeed checks and balances. Congressional support is necessary for implementing such tariffs, and international agreements also come into play. If faced with substantial pushback from Congress or allies, Trump’s capacity to impose these tariffs may be constrained. Nevertheless, his administration could still initiate tariffs under certain trade laws, but the long-term sustainability of such measures may face legal and political challenges.
Editor: Thank you, Dr. Lee. It seems we are entering a complex phase in U.S.-China trade relations, and your insights have been invaluable today.
Dr. Lee: Thank you for the opportunity to discuss this critical topic. I’m looking forward to seeing how these developments unfold.
Editor: Likewise! We hope to keep our readers informed as we monitor this evolving situation. Thank you again for your time.